{"id":17616,"date":"2023-09-08T06:27:03","date_gmt":"2023-09-08T11:27:03","guid":{"rendered":"https:\/\/ustower.net\/?p=17616"},"modified":"2023-09-08T06:27:07","modified_gmt":"2023-09-08T11:27:07","slug":"why-bidens-strong-economy-feels-so-bad-to-most-americans","status":"publish","type":"post","link":"https:\/\/ustower.net\/?p=17616","title":{"rendered":"Why Biden\u2019s strong economy feels so bad to most Americans"},"content":{"rendered":"\n

What\u2019s the biggest problem with the US economy right now? The vibes are off.
By almost any objective measure, Americans are doing much better economically than they were nearly three years ago, when President Joe Biden took office. Still, a majority \u2014 58% \u2014 say Biden\u2019s policies have made economic conditions worse, according to\u00a0a new CNN Poll conducted by SSRS.
That\u2019s up from 50% a year ago.
But the grim outlook is at odds with the hard data, which reveal an economy bursting with optimism.
\u201cHas the economy improved under Joe Biden? There\u2019s literally no question,\u201d said Justin Wolfers, a professor of public policy and economics at the University of Michigan.
In January 2021, the start of Biden\u2019s term, \u201ceverything sucked,\u201d according to Wolfers. Unemployment was at 6.3% and the economy had yet to rebound from the shock of Covid-19. Wolfers described that time as \u201cone of the worst economic moments of my life.\u201d
Two and a half years later, the US economy is in a much healthier spot.
Unemployment\u00a0has been hovering near its lowest level in a half-century \u2014 roughly 3.5% \u2014 for the past 18 months. August marked the 32nd consecutive month of job growth. Real wages (meaning adjusted for inflation) are rising. That\u2019s helped everyone feel confident about continuing to spend money, which keeps the US economic engine humming.
Put another way: People are spending like they\u2019re in a good mood, even if they say they\u2019re not.
\u201cThere\u2019s this disjunction between reality and perception that\u2019s as large as I\u2019ve ever seen in my career,\u201d Wolfers told CNN. \u201cIf you\u2019d fallen asleep in 2019 and woke up in 2023, you would discover pretty much the sort of economy you would have expected.\u201d
So, why the sour mood?
In short: Inflation, housing and bitter national politics.
How the economy is thriving
Economists are practically stumbling over themselves to revise their growth forecasts higher. Many banks are drastically\u00a0rolling back\u00a0or even reversing their expectations for a 2023 recession.
On Wednesday, S&P Global Market Intelligence raised its third-quarter GDP estimate by nearly two percentage points to an annualized rate of 4%, citing surprisingly strong retail sales data. It moved its annual estimate up slightly to a historically strong 2.3%.
An even sunnier outlook comes from the Atlanta Fed\u2019s GDPNow model, which currently expects third-quarter GDP growth at a whopping annualized rate of 5.6%.
The economy is \u201cgrowing much stronger than we anticipated,\u201d Morgan Stanley economists recently told clients in a research report. The bank now expects GDP for the year to clock in at a 1.9% pace \u2014 nearly double its previous projection.
Inflation hangover
Sharply higher prices in 2021 and 2022 marked a painful economic moment for households around the world. In the United States,\u00a0inflation\u00a0peaked at 9.1% in June 2022. The euro zone hit 10.6%, while the UK topped 11%.
Inflation has dramatically improved. The United States hit 3.2% in July, according to\u2002the\u2002latest Consumer Price Index. (The euro zone hit 5.3% in August, while the UK is at 6.8%.)
That means prices overall are still about 18% higher today than they were in late 2019, before the pandemic, according to the Bureau of Labor Statistics.
Despite all of that, real personal consumption expenditures are still growing at a strong pace, said Carola Binder, associate professor of economics at Haverford College. \u201cSo it seems that \u2018bad vibes\u2019 are not leading to a lot of precautionary saving.\u201d
Gas prices on the rise
Gas prices, which are notoriously volatile, tend to feel like a slap in the face because they are unavoidable \u2014 even if you don\u2019t drive, you see the prices on display outside every gas station.
Throughout 2022, gas prices were\u00a0especially hard to predict\u2002as the Russian invasion of Ukraine jolted global commodities markets.
Earlier this summer, US drivers were enjoying big savings on gas compared with 2022. But by late August \u2014 around the time the CNN poll was conducted \u2014 prices had climbed back up to their\u00a0highest level in months, just shy of $4 a gallon on average.
Unaffordable housing
The economy feels extra crummy for people looking to buy a home.
Housing affordability\u00a0is at its lowest point in decades, with mortgage rates climbing\u00a0above 7%\u00a0to their highest level in more than 20 years. When Biden took office,\u00a0mortgage rates were at a record low of 2.65%.
The Fed is partly to blame. Eleven interest rate hikes over the past year and a half have helped push mortgage rates higher, faster.
The median US home price has risen to $416,100 from $258,000 in 2019.
But the affordability issue isn\u2019t just because of higher financing costs. It\u2019s also because of\u00a0historically low inventory, thanks to a pandemic-era buying spree combined with a lingering shortage rooted in the 2008 subprime mortgage crisis.
The partisan gap
CNN\u2019s\u2002latest poll\u2002shows that Republicans and Democrats are both souring on President Biden\u2019s handling of the economy.
Only 2% of Republicans and 48% of Democrats said economic conditions had improved under Biden. Nearly a quarter of Democrats said Biden\u2019s policies have worsened economic conditions. Ninety-one percent of Republicans agreed.
\u201cPeople are no longer telling us how they feel about the economy \u2014 really, they\u2019re telling us how they feel about the president,\u201d Wolfers said.
Either way, that poses a political problem for President Biden, whose re-election campaign has sought to highlight the economy\u2019s strengths.
\u201cYou can\u2019t jawbone people into feeling better,\u201d said former White House senior adviser David Axelrod on CNN This Morning. \u201cI think the president has to find a way to talk about the things that he\u2019s done in a context other than kind of asking for a report card from the American people.\u201d
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What\u2019s the biggest problem with the US economy right now? The vibes are off.By almost any objective measure, Americans are doing much better economically than they were nearly three years ago, when President Joe Biden took office. Still, a majority \u2014 58% \u2014 say Biden\u2019s policies have made economic conditions worse, according to\u00a0a new CNN […]<\/p>\n","protected":false},"author":6,"featured_media":17617,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[1199,1785,1169,2074,2976],"class_list":["post-17616","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics","tag-americans","tag-bad","tag-biden","tag-economy","tag-feeling"],"_links":{"self":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/17616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17616"}],"version-history":[{"count":1,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/17616\/revisions"}],"predecessor-version":[{"id":17618,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/17616\/revisions\/17618"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/media\/17617"}],"wp:attachment":[{"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}